D.C. Repeals Tax on Municipal Bond Interest Income for Individuals

Private Client Alert

On July 30, 2013, the District of Columbia retroactively repealed the provision that would have subjected most tax-exempt bonds owned by D.C. residents to D.C. income tax.  This change restores the historic position of the District of Columbia exempting from D.C. income tax the interest on municipal bonds issued by any state or municipality.  Therefore, municipal bond interest income earned by individuals, estates, and trusts will be exempt from taxation in D.C.

Previously the District of Columbia had enacted legislation that would have subjected municipal bond interest to tax to take effect on January 1, 2012.  Later legislation delayed the effective date to January 1, 2013.  The most recent legislative action repeals the provision completely. For more information on the new law, please visit The D.C. Office of Tax and Revenue's website.

Please visit our website to view a related Alert on this topic.  If you have any questions about this Alert, please contact:

Beth Shapiro Kaufman

Michael G. Pfeifer

For more than 45 years, Caplin & Drysdale has been a leading provider of a full range of tax and related legal services to companies, organizations, and individuals throughout the United States and around the world. With offices in New York City and Washington, D.C., the firm also provides counseling on matters relating to tax controversies, bankruptcy, creditors' rights, exempt organizations, employee benefits, private client services, corporate law, white collar defense, complex litigation, and political activity.

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